My Belgian cafeteria plan: like a kid in a candy store

Autumn has arrived! Not only is this the period where college and university kids start a new year, but it’s also the period where I have to choose my extra-legal benefits for next year.

Choosing my benefits is an enjoyable feeling: like a kid in a candy store with well-filled pockets. It’s so hard to choose. Just like in previous years, I can choose from a list of benefits that my employer made available at the beginning of next year.

While there is more choice, the big difference this time is that I have an unlimited gas card and an extra budget for a company car! Thanks to the very beneficial tax benefits it is something that can save you a bit of money in Belgium.

These seven extra benefits don’t come for free. I have a so-called cafeteria budget at my disposal. This budget is part of my salary and the thirteenth month.
In exchange for some of this budget that my employer takes per month, I can receive the benefits. The nice thing is that my employer provides these benefits at a discount resulting in a net benefit for the employer. Though this net benefit is not always calculated from the best market price (like is the case for the IT devices).

I have listed all the benefits I can choose this year here. The benefits my employer offers are very popular among most of my colleagues. Therefore, the offer this year remains unchanged.
Important to note is that these benefits are separate from the ones I already get like free public transport subscription to and from work. Free bike rental in Brussels, all kinds of vouchers, etc.

With the contenders aligned, it’s time to decide. This wasn’t easy in the past since I had didn’t plan on getting a salary car.
Now that my living conditions have changed and I’m standing on my own two feet, I need a car for those more distant and heavier grocery trips. Visiting friends that live further away now is also a big part. My friends are also on their own and building their lives with their partners. It makes my choice a lot easier, to be honest.

The main “downside” a salary car has, is the significant impact on my salary package. I can still use all the money I earn now that I have purchased a Brussels apartment. I prefer to keep the monetary “loss” to a minimum because of this. That’s why I initially decided only to get a salary car.

A 600 euro car

With only a salary car and nothing else, I can limit the extra reduction in net salary to about 300 EUR if I limit the salary car budget to 600 EUR. I decided on this budget because it gives freedom on brand, model, and options. The remaining net salary should still be a solid 2500 EUR. This is a reduction of 350 EUR compared to what I got until now.
The observant reader might have noticed 2500 – 2850 = 350, not 300. That 50 EUR is because of the loss of bike compensation, but I lost that already because I don’t have to bike to the train station anymore.
While this is just an estimation, I will soon know if it holds. I will quickly be able to make accurate estimations once we can make our final choices.

My choice: BMW X1

As of January 2020, I’m the proud lease-owner of a BMW X1 18i auto. I’m happy with my choice since I could get all the options I wanted and then some. Though, to be fair, as I’m updating this during the 2021 winter months, I wish I had selected a heated steering wheel.

My second choice: Smartphone (for my wife)

For 2022 I decided to get a smartphone. Not for me, but my wife. She urgently needs a new one, and this came at the right time. Thanks to a change in the plan, smartphones are competitive now.

We ended up going for the Samsung A52S 5G. It’ll only cost me ~€320 after 24 months.

Out of all the options listed above, you might have noticed that there is one that could actually be interesting to continue: pension saving.

While it sounds interesting is actually not the most optimal use of money. I need to put my money in an actively managed fund that is strictly regulated which results in subpar performance across the board. On top of that, the costs are excessive. Running costs can go as high as 1.5% and entry fees of 3%.

Finally, in the normal scenario, the tax authorities charge my pension savings at 8% on my 60th birthday. By the normal scenario, I mean pension savings contracts that were concluded before the age of 55, were not requested before the age of 60, and whose annual amount saved was not increased since the age of 55. If I request the amount saved before the age of 60, the tax that I must pay can be as much as 50%!

The reasons why I decided to do it till now are twofold:

• I could: I didn’t need the money and thanks to the extra benefit through my employer I got just a little bit more return.
• Diversification: the funds have to follow the following rules: invest up to 75% in shares or bonds, invest up to 20% in non-euro coins and invest up to 10% in cash.

But now I have better use of my money, namely the mortgage payment and my personal portfolio that has a stellar performance.